The chief executive officer of Social Finance Inc.
is stepping down before the end of the year amid sexual harassment
accusations leveled at one of the most valuable financial technology
startups.

Michael Cagney becomes the highest-profile executive to depart the online lending service that’s grappling with a lawsuit
claiming harassment and fraudulent actions by managers. Cagney has
engaged in at least one inappropriate relationship with a female
employee, with suggestions of others, according to people familiar with
the matter. The New York Times earlier reported on the resignation and
some of the allegations.

That
behavior has fueled a toxic work environment and blurred reporting lines
for staff, according to the people, who asked not to be identified
talking about sensitive internal matters. Cagney’s relationships,
they say, distracted employees and made interactions
uncomfortable. Several left SoFi in recent months because of a
culture of sexual relationships among the company’s top ranks, one of
the people said. Cagney’s wife, June Ou, is SoFi’s vice president of
engineering and chief technology officer.

Allegations of misconduct at SoFi come on the heels of
high-profile cases of unethical behavior across Silicon Valley, after a
former Uber Technologies Inc.
employee alleged she was sexually harassed at the company but her case
was bungled by human resources. Since then, a series of disclosures from
female entrepreneurs have unveiled systemic harassment by venture
capitalists. Revelations of discrimination at Uber contributed to the
ouster of founder and former CEO Travis Kalanick.

Cagney,
who’s said his company would not tolerate sexual misconduct, addressed
the issue in a memo sent to employees announcing his resignation.

“I
could not be prouder of the company we’ve built together. Recently,
though, the focus has shifted more toward litigation and me personally.
The combination of HR-related litigation and negative press have become a
distraction from the company’s core mission,” he wrote in the memo. A
SoFi spokesman declined to comment further.

The firm has started a
search for a successor and Cagney will remain in his role until the
board makes its selection, the company said in a statement. The board
elected Tom Hutton executive chairman, effective immediately, as Cagney
gives up the position.

Similar
to Uber, SoFi is another well-capitalized Silicon Valley startup that
has grown rapidly over the last several years. The company was valued at
$4.3 billion in its last financing round in February, raising more than
$1 billion from investors including SoftBank Group Corp. and Silver
Lake Partners. It started out in 2011 by refinancing loans to
high-earning graduates from top universities. It’s since pursued a more
ambitious vision, expanding into products from personal loans and
mortgages to wealth-management and life insurance.

In August, Brandon Charles, a former senior operations manager at SoFi, sued
the startup claiming he was fired for reporting sexual harassment by
managers. The case was expanded this month to allege that the startup’s
chief executive “fosters a sexually charged corporate culture that
condones unlawful conduct,” and deters victims from speaking out. A SoFi
spokesman has said the ex-employee’s claims were without merit.